A retired postal inspector has alleged Chino city officials have engaged in a number of illegal acts and breaches of their fiduciary duty in providing themselves benefits and compensation to which they are not entitled totaling at least $478,000 since the year 2000.
Specifically, Bob Nigg, a 15-year resident of Chino who was formerly employed by the federal government as a postal inspector, maintains that members of the city council with the assistance of senior city staff and the city attorney passed resolutions which conferred upon themselves retirement and allowance benefits that exceeded those permitted by law and which were not the same as benefits made available and paid to the city’s employees, actions which are in violation of California’s Government Code §1222, §36506, §36514.5, §36516, §37206, §1090 and Penal Code §424.
Chino’s official spokeswoman, Michelle Van Der Linden, told the Sentinel, “We have reviewed the allegations raised by Mr. Nigg and are convinced that the city, its employees, and its council members have fully complied with all legal requirements, including the Government Code sections referenced by Mr. Nigg.”
Nigg’s accusations against the city council are contained in a complaint on file with the district attorney’s office’s public integrity unit. In addition, Nigg has also requested that the district attorney look into accusations that Chino City Attorney Jimmy Gutierrez  violated Government Code Section 1090, which is aimed at prohibiting government officials from engaging in financial conflicts of interest by which they personally benefit, when he acted to negotiate on the city’s behalf the terms of his own employment contract with the city, and in which the city council members also had a financial benefit.
That accusation parallels one made in a lawsuit brought against the city of Chino and Gutierrez by the Inland Oversight Committee, which is represented by attorney Cory Briggs.
According to Van Der Linden, “The city is currently involved in litigation brought by Cory Briggs to challenge the city attorney contract and will reserve further comment until that matter has been resolved. We are confident of a favorable outcome.”
At present, according to documents obtained by the Sentinel, district attorney’s office investigators are examining and assimilating scores of city documents which are alleged to demonstrate how public funds were illegally used to compensate the elected officials of the city of Chino.
Nigg says he became concerned over the transparency and accountability of how public moneys were being spent as a consequence of the public corruption scandal in the city of Bell. As a consequence, he turned his focus to the city of Chino and its officials, discovering what he considered to be excessive salary and benefits paid to the city’s elected leaders.
In the aftermath of the Bell revelations, the California state controller created a database in which information concerning the compensation and benefits paid to California’s governmental employees is posted.
“One of the purposes of the controller’s database is to make available records to the public so that possible illegal compensation to public employees does not go unnoticed as it had in Bell,” Nigg said.
Based upon a review of the controller’s database, Nigg learned that Chino elected officials’ total compensation was significantly higher than that paid to officials in other comparably sized local cities. Upon conducting a further analysis of the issue and making various public records requests to the city of Chino, Nigg uncovered what he believes are numerous violations of California state laws.
“Most of those consist of the method in which the elected officials of Chino are being compensated,” he told the Sentinel. “Unlike Bell, which is a charter city, Chino is a general law city and there are various laws restricting the eligibility and amount of compensation that can be paid to elected official.  Under Government Code §36516, there is a maximum amount of salary that can be legally paid to city council members. The Chino City Council enacted several policies, procedures, resolutions or ordinances to circumvent the maximum compensation as allowed by law. By my interpretation, such schemes are illegal.”
Nigg said mayor Dennis Yates and all four of the other council members – Eunice Ulloa, Glenn Duncan, Tom Haughey and Earl Elrod – were implicated in the wrongdoing.
According to Nigg, what he called “the most egregious” illegal compensation scheme relating to Chino consisted of the city council’s adoption of Resolution 2006-051 on June 20, 2006, made retroactive to August 1, 2005.
“This resolution resulted in a health benefit bank compensation paid to the city council members that was not the same benefit available and paid by the city for its employees as mandated under Government Code §36516(e),” Nigg said. “As an example, in 2010 city council members received health benefit bank compensation of approximately $26,629 annually, whereas other city employees received benefit bank compensation of $15,672, a difference of $10,957 annually in what I believe to be excessive and illegal compensation. In my complaint filed with the district attorney’s office, I alleged such payments to be in violation of California Penal Code §424, related to the misappropriation of public monies.  My complaint also alleges that in order to circumvent the maximum compensation requirement of the government code, the city council tailored a unique employment contract with the city attorney, which would allow the excessive health payments to also be classified as retirement benefits.  Such a unique contract tailored for only the few council members and only one other individual, the city attorney, is also alleged to be a violation of Government Code §1090, as the city council members had a financial interest in the contract with the city attorney.  In 2011, after the State Controller required the compensation of the city council to be included in the database made available to the public, the city council took action to reduce the health bank benefits they had voted for themselves to being the same benefit amount as made available and paid to the other employees of Chino.”
Nigg estimated the “total illegal benefits” so derived as “over $270,000 between 2005 and 2011.”
Nigg further alleges that city council voted to approve a “unique and tailored retirement benefit” for councilwoman Eunice Ulloa, who is a full time employee with another public agency, the Chino Basin Water Conservation District, where she receives both health and retirement benefit compensation.
“California retirement law restricts those enrolled in the Public Employee Retirement System (PERS) to only one retirement plan,” according to Nigg. “To circumvent this legal restriction, the Chino City Council created a unique deferred compensation benefit tailored to benefit only Ulloa in possible violation of § 36516(e). I believe that such a plan resulted in Ulloa being compensation the value of the PERS plan into a separate retirement plan, and no other employee of Chino was bestowed this unique benefit. It is alleged in my complaint to the district attorney that such a benefit would be a violation of Government Code §1090 as a conflict of interest and would also be in violation of Penal Code §424.  It is estimated that such alleged misappropriation of public monies could exceed $24,000 since August 1, 2005.”
Moreover, Nigg maintains that members of the city council for thirteen years helped themselves to a perquisite to which they were not entitled in a way that ran afoul of state law.
“Since the year 2000, Chino City Council members have received $1,440 annually in deferred compensation in addition to their salary,” Nigg stated. “Such deferred compensation was never authorized by the passage of a city resolution or ordinance as required under Government Code §36506 and §37206.  Such unauthorized payments continued until August 6, 2013, when the city council adopted Resolution 2013-46, authorizing such payment without taking any action to have the city council reimburse the city for the alleged previously unauthorized and illegal payments.”
Nigg’s complaint on the matter, filed with the San Bernardino County District Attorney’s Office, alleges that even after the passage of Resolution 2013-46, the deferred compensation payments are still illegal and are in violation of §36516(e) as the same retirement benefit is not made available and paid to the other employees of Chino.  In 2000, the annual deferred compensation payment represented over 13 percent of the salary of the city council.  Currently, the deferred compensation is calculated to be over 9 percent of their salary. It is alleged that the enactment of Resolution 2013-046 is a violation of Government Code §1090 as a conflict of interest because the deferred compensation benefit was tailored and unique to only the city council members.  It is also alleged that a violation of §36516(e) has occurred as the other employees of Chino are not paid the same benefit of deferred compensation of over 9 percent of their salary, in addition to the city paid PERS contributions.  It is believed that as a result of such possible violations of state law, the city council could have misappropriated as much as $90,000 of public monies since the year 2000 in violation Penal Code §424.
Nigg has zeroed in on how the city council misapplied the process for obtaining reimbursement for expenses such that they received financial benefits to which they were not legally entitled.
“Based upon abuses to payments made to government officials for official expenses, the state legislature enacted Government Code §36514.5, requiring that city council members can only be reimbursed for actual and necessary expenses incurred in the performance of official duties, subject to the requirements of §53232.2 and §53232.3 of the same code,” Nigg said. Nigg’s complaint to the district attorney’s office alleges that the Chino City Council in violation of §36514.5 adopted Resolution 2005-093 in December of 2005, resulting in a monthly communication allowance of $100.  It is alleged that this $100 monthly allowance is in violation of the reimbursement laws as such a monthly allowance is not for an actual expense.  Additionally, it is alleged that prior to 2005, the city council never adopted a resolution or ordinance authorizing the payment of a communication allowance as required under §36506 and §37206.  The failure to abide by the reimbursement laws is alleged to have resulted in the misappropriation of public monies in violation of Penal Code §424 that could exceed over $80,000 since the year 2000.
Nigg said that on August 6, 2013, the city council implicitly acknowledged that such communication allowance payments were unlawful and put an end to such compensation by the passage of Resolution 2013-046.  However, Nigg points out that the city council never reimbursed the city for the past illegal compensation, and in another move to pad their compensation, the council increased its members’ vehicle allowance by the equal amount of $100 per month.
“The city council is now receiving $500 per month in compensation for a vehicle allowance and has done so without ever presenting any empirical evidence that such a vehicle allowance is reasonable,” Nigg said.
Additionally, Nigg alleges that under IRS regulations, the $500 allowance is considered to be included in the salary of the employee.  Nigg points out that under the standards of Government Code §36516,   the $500 per month in vehicle allowances should be included in the total salary calculations paid to the city council. Thus, he reasoned, the compensation paid to the Chino City Council exceeds the maximum salary allowed to be paid to city council members.  Such payments would also be in violation of the Government Code and are alleged to be in violation of Penal Code §424.
“Government Code §36516 states that for a city with a population the size of Chino the monthly maximum salary of the city council is $600 per month,” Nigg said. “This law also allows for the maximum salary of $600 per month to be increased by up to no more than 5 percent per year since the last increase.  The Chino City Council has showed a pattern of normally voting itself the maximum 5 percent per year, and the current salary of the city council members is $1,281 monthly or $15,372 annually.”
Even though the city council is allowed the 5 percent per year increase as permitted by §36516(a)(4), the city council salary had been illegal compounded, Nigg insists.
“The California State Attorney General in issuing Opinion Letter #06-504 made clear that the 5 percent salary increases should not be compounded,” Nigg said. “Since at least the year 2000, the city of Chino has unlawfully compounded the salary increases of the city council, which would not be permitted under §36516.  Such alleged illegal compounding was brought to the attention of the city manager and the city council in late 2012.  Chino officials took no known action to correct the improper payment or to have the city council reimburse the city for the improper payments.  It is alleged that such payments would be in violation of Penal Code §424 and could exceed $14,000 in unlawful compensation since the year 2000.”
Nigg’s complaint also alleges a violation of Government Code §1222 has occurred as the public officers of Chino have willfully failed to perform their duties as enjoined by law.
Nigg said he was aware of current civil litigation in the San Bernardino County Superior Court, including Case No. CIVDS 1314931. Attorney Corey Briggs had alleged city attorney Jimmy Gutierrez acted improperly when he negotiated the terms of his law firm’s contract with the city. Nigg alleges the contract not only contained a conflict of interest because the city attorney negotiated his own level of remuneration, but the contract created a financial conflict of interest for the elected officials of Chino whereby they were able to increase their compensation as elected officials paid in retirement benefits and that these retirement benefits were not made available and paid to the other employees of Chino as required by law.  “I believe the contract between the city attorney and the city was tailored and contained a unique benefit in which only the city attorney and the elected officials received the additional compensation,” Nigg stated.
In the demurrer to the lawsuit brought by Briggs on behalf of the Inland Oversight Committee relating to Gutierrez negotiating his employment contract, the attorneys representing Gutierrez, his law firm and the city of Chino, Stephen Larson and Jonathan Phillips of the Los Angeles-based law firm Arent Fox, maintained no crime of any sort had been committed and that the lawsuit seeks to apply an impossibly impractical standard to the conducting of the city’s business.
“Plaintiff The Inland Oversight Committee has brought a meritless and untimely claim for an alleged violation of Government Code Section 1090. Despite a complete lack of legal or evidentiary support, plaintiff contends that defendants Gutierrez, Fierro & Erickson, a professional corporation, and its individual attorneys, Jimmy L. Gutierrez, Arturo N. Fierro, and James E. Erickson violated Section 1090 when they entered into an amended contract to continue serving as city attorney for real party in interest the city of Chino,” the demurrer states. “In filing this frivolous complaint, plaintiff ignores the fact that California law permits government employees to negotiate the terms of their own employment, and fails to recognize the absurd real-world consequences that would otherwise result.”
Nigg acknowledged that in terms of scale and monetary totals, the scandal that engulfed Bell was more egregious than the action involving Chino officials. Nevertheless, he said, he believed Chino officials had acted contrary to the interests of those who had entrusted them with the authority they are wielding and that they had violated the law.
“This may not be as big as what happened in Bell, but the same principle is involved,” Nigg said. “They abused their positions of trust.”
Nigg, who obtained documentation relating to the crimes he is alleging through a several-month long series of public records requests, has turned that documentation over to the San Bernardino County District Attorney’s Office’s Public Integrity Unit. He called upon the district attorney’s office to pursue criminal charges against all five members of the city council rather than merely seeking restitution and allowing them to remain in office.
“I believe the acts they engaged in are violations of the official duties of the Chino officials,” Nigg said. “Under California laws, including Government Code §1770(h), if convicted in a court of law for the alleged criminal violations, the law would require their removal from office as their positions become vacated.”